U.S. DEA Probes Online Opioid Market’s $450M Crypto Flows
The U.S. Drug Enforcement Administration (DEA) has spent three years tracking ShanghaiChemicals, an online marketplace accused of exporting fentanyl ingredients from China to fuel America’s opioid epidemic.
According to Forbes, investigators now believe the shadowy operation behind the website may simultaneously defraud narcotics buyers through an elaborate crypto-powered con.
Details from a recently unsealed DEA search warrant reveal vast cryptocurrency transactions shuffling through ShanghaiChemicals-linked accounts. This suggests either massive illicit revenue streams or an outright scam duping drug traffickers out of millions.
Key Developments:
- Investigators have been monitoring ShanghaiChemicals since late 2019.
- An estimated $3.5 million flowed into one suspect account in 2021.
- Over $450 million has been swapped across associated crypto wallets since 2017.
- DOJ targets Chinese suppliers flooding the U.S. with deadly fentanyl.
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The site visibly caters to the pharmaceutical industry but covertly offers to ship fentanyl and opioids to U.S. dealers. However, the DEA alleges ShanghaiChemicals takes orders and payments for large batches of drugs that ultimately never arrive.
ShanghaiChemicals Take Bitcoin Payment, No Delivery
To test this theory, the agency worked with a confidential informant to buy 130 grams of fentanyl through the platform for $2,500 in late 2019. Supplemental funds were transmitted via Bitcoin once China-based contacts demanded more money. Yet over two years later, the narcotics were never delivered.
If valid, the failure suggests ShanghaiChemicals tricks illegal buyers into expecting clandestine postal deliveries while absconding with cryptocurrency.
Gains appear far from trivial. Last year alone, a Binance account with tight ties to ShanghaiChemicals took in $3.5 million in crypto deposits, per DEA filings. Additionally, across nine ShanghaiChemicals-affiliated wallets identified between 2017 and early 2022, $450 million changed virtual hands through over 77,500 transactions.
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U.S. Blasts China Fentanyl Flows
Cryptocurrency data spotlights the enormous scale of Chinese chemical peddlers, whether ShanghaiChemicals specifically scams patrons or not. In October 2021, the Justice Department indicted multiple Chinese nationals operating fentanyl ingredient websites, explicitly linking orders to Mexico’s dominant Sinaloa and Jalisco cartels before the substances reach U.S. streets in pill form.
Attorney General Merrick Garland asserted that fentanyl, behind surging overdose deaths, commonly originates from Chinese labs. One analysis revealed just 90 known Chinese suppliers logged $27 million in crypto transactions—enough for U.S. market pills worth $54 billion.
